Shares of New York Community Bancorp fell more than 25% on Friday after the regional lender announced a leadership change and disclosed problems with its internal controls.
The regional bank announced after the market closed Thursday that Alessandro DiNello, its chief executive officer, is taking on the role of president and CEO, effective immediately. NYCB has been under pressure in recent months, in part due to concerns about its exposure to commercial real estate.
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NYCB shares fell sharply in after-hours trading.
The bank also announced a revision to its fourth quarter results and added a disclosure of its internal risk management.
“As part of management’s assessment of the company’s internal controls, management has identified material weaknesses in the company’s internal controls related to internal credit review, resulting from ineffective oversight, risk assessment and monitoring activities,” the company said in a filing with the US Securities and Exchange Commission.
DiNello was previously CEO of Flagstar Bank, which acquired NYCB in 2022. He was named executive chairman of NYCB in early February, shortly after Moody's Investors Service downgraded the bank's credit rating to junk status.
“Although we have faced recent challenges, we are confident in the direction of our bank and our ability to deliver long-term for our customers, employees and shareholders. “The changes we are making to our board and leadership team reflect a new chapter that is underway,” DiNello said in a news release Thursday.
In another leadership change, Marshall Lux was named chairman of the NYCB board, replacing Hanif Dahya. According to the press release, Lux served as global chief risk officer for Chase Consumer Bank at JP Morgan from 2007 to 2009.
NYCB shares have fallen 65% since the beginning of the year. This sell-off was triggered by the bank's disclosure on January 31 that it had taken a higher-than-expected charge for potential loan losses.
The specter of loan defaults renewed fears about the state of the commercial real estate market and regional banks in general. Several regional banks, including Silicon Valley Bank, failed in 2023 after customers and investors raised concerns about the value of debt on banks' balance sheets.
NYCB was actually the buyer of one of these failed banks, Signature, in March of last year.
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